Sunday, January 07, 2007

Now before you get all over me about fascism I'm using it in the common sense of tyranny. I'm not using it in the sense of Mussolini's actual political program although the difference is only in detail, not in kind.

With that out of the way let me quote some historians:

"Concentration of wealth is a natural result of concentration of ability, and recurs in history. The rate of concentration varies (other factors being equal) with the economic freedom permitted by morals and the law... democracy, allowing the most liberty, accelerates it. -- Will and Ariel Durant

What brings all this to mind you ask? A discussion on the Netscape blog about how the middle class is getting screwed.

Every one on the board has an different idea of what is to be done. One fellow thinks there is too much corporate profit. I have a few things to say about Profit. Here is what I said at Netscape:

Without profits there is no money for investment.

The higher the investment per worker the higher the wages.

What do you think the corporations are going to do with their record profits? Hide them in a mattress?

Even Marx said that if you want to build up capital, capitalism is the way to go.

Next up says we shouldn't be satisfied with the scraps the rich throw us. We should just take what we want. Through government agency of course. Other wise it would be robbery. Can't have that. We need proper laws and they must be adhered to. Corporate profits must be fair and CEO salaries reasonable.

I replied:

Of course we should't be satisfied with scraps.

The government should confiscate all wealth and use it for the common good.

Say hasn't that been tried before? The USSR I believe. I hear it is not working out so well for them. You don't hear much from those guys lately. I wonder why?

I add:

Every place this redistributionist crap has been tried overall economic performance declines.

This is all pure envy. One of the deadly sins.

If I'm doing OK I do not give a damn if the rich are doing 100,000 times better.

The reason for the high CEO bonuses is that really good managers are hard to find. Tell you what though. If it so easy apply for the job. I'm sure the companies would be really glad to pay 1/2 as much for better talent.

Me? I don't like to manage groups of more than about 10.

No way I want the CEO's job. Too much grief. However, if you think you can do it, apply.

The complainers are usually ignorant of how difficult it is to do well in such a job.

Next guy up says that profits must be fair (whatever that is) and the President of Dell makes too much money (227 million is claimed).

I go after that:

Even unfair profits get invested.

Really high profits attract vendors into a business. Which ultimately lowers prices. The higher the initial profits the faster the decline.

The high profits encourage risk taking. The more risk taking the faster technology advances.

Envy makes people want to kill the golden goose. Stupidity does the rest.

So if the Dell guy is making too much buy an HP or a Gateway. Or do what I did. Get a free working computer off the street. [I gave it to my daughter who uses it for school work. My readers helped me get a nice Gateway with their generous Donations.]

Who cares what the Dell guy makes? The question is: does he sell you merchandise you want to buy at a price you are willing to pay? If so, to the corporation he is worth every penny. Computers are a very hard business these days. Just brutal. It takes two years to develop a new model. Sales of that model last from 3 to 6 months. If you come in around 3 months of sales regularly you go broke. If you regularly get 6 mos. of sales from a model you get rich. Not much margin for error. The guy is worth every nickel.

Next up says that heath care ought to be mandatory with a job. If a business can't offer health care it ought not be in business.

Response:

You can have a choice. If the business you work at will not offer health care it is better if you don't have a job.

Man, there is a LOT of ignorance out there.

Then we have the middle class is sliding into poverty and corporations do not pay enough taxes.

Median family income is $46K a year and rising.

Some slide into poverty.

Corporations don't pay taxes. It is included in the price they charge you. Unless they go broke. In that case they still don't pay taxes.

Heck even Socialist Spain has lowered corporate taxes. Maybe they have real economists running the country? Perhaps they want to attract American Corporations?

We should lower all taxes as much as possible to attract rich people to America. Better if they spend their money here. Provides jobs for people

Think people. Think. I know it hurts, but try.

Another guy complains that you can't get ahead. And, a bunch of Wall Street guys are getting rich just trading paper.

The reality is if you want to get ahead invest in yourself. Get more educated. Start a business. To do that you have to turn off the TV and quit spending your time bitching on forums like this. However, I will grant that bitching is easier. [It can also be quite profitable given the size of the market, if you can find a way to sell it.]

The people who get ahead are risk takers.

Unwilling to take a risk? Then be satisfied.

Envy will make even the richest person unhappy.

Which reminds me of Ouspensky who said "Some people get all their pleasures from negative emotions." A sorry way to live. You can't deny some people enjoy it.

Then we get the fanfare for the common man who is the real creator of all the wealth, so salaries should be capped.

It is the risk takers that create wealth.

The labor theory of value is unsound.

On top of that some people's labor is worth more than others.

When you are looking for a brain surgeon do you shop based on price? You cap the brain surgeon's income and he will fix fewer brains and raise prices accordingly. Is that a desirable outcome?

Then we get back to why CEOs are paid so much while the "real worker" on the production line is short changed.

Brain work is harder than manual labor.

Don't believe me? Then study an advanced economic text and get back to me.

Hey study a simple one. Milton and Rose Friedman's "Free To Choose" is a good place to start.

Management is very difficult. If it was easy they would get paid less than the factory workers. Their price is strictly dependent on their scarcity. It is why gold is worth more than iron.

Another guy wants restricions on how many homes a person can own and the elimination of the house rental market. To eliminate speculation in housing. Another fellow says you need to design the rules with special leeway for special cases. It is only fair. (man it sounds like these folks have a career waiting for them in the legislature)

The best leeway is no restriction.

When polititians control what is bought and sold the first thing bought and sold is polititians

So I guess you want to corrupt politics. This would be a very good move in that direction.

I add in a little later:

If we just had enough of the right laws we could create a perfect world, except for corruption and law violators.

The Soviets had a lot of those kinds of problems. Perfect laws. Rampant corruption.

Seems like they go hand in hand.

Well the thread goes on and on like these threads do.

Here is a classic. I'm not paid enough and things cost too much. No doubt government needs to fix this.

Every one should not try to get as much as they can for their work and people should stop shopping for the lowest prices

Where is the New Socialist Man when you need him?

OTOH maybe people should strike bargains - i.e. buyer and seller should buy and sell by mutual agreement.

Then government wouldn't need so many watchers and there would be fewer opportunities for corruption.

Well you know who is wrecking it for everyone? The greed heads.

Buyers are greedy for a low price. Sellers are greedy for a high price.

You work them against each other. It checks and balances out.

If the commenter was not greedy for a low price when he buys he would have no bitch.

If he was not greedy for a higher price when he sells his labor he would have no bitch.

I see a lot of greed and envy on this thread. People not satisfied with what they are paid. People unhappy about the high prices of things they buy.

We can fix this by putting a gun (government) to people's heads.

Goods will cost less and salaries will be increased.

I think doubling salaries and halving the price of goods is about right.

Let's pass a law.

Then we come back to the general whine. Globalization is stealing our jobs.

I remember when we had the same worries about Japan and Taiwan and South Korea.

Evidently they don't teach David Riccardo's theory of comparative advantage in economics schools any more.

Every one's output is some one else's input. Lowering costs improves economic performance. Lower cost paper means cheaper books. Cheaper books lower the cost of education. More education raises earning power. So should the publisher get his paper cheaper from China? Or the more expensive paper from America?

If you are a paper maker the answer is obvious. However, every one else in the chain of buyers and sellers is hurt.

The best thing to do is to buy from the lowest cost producer of adequate quality. This also improves our export position.

The publisher can sell more books around the world if he uses Chinese paper. Since the profit is higher on the books than on the paper we have a double net gain

Let me repeat. Every one's output is some one else's input.

Well it goes on. I believe I have said more than enough on the subject for now.

Let me leave you with a final quote: John Wayne said, "Life is tough, and it's tougher when you're stupid."

8 comments:

Simon,I marvel at your endurance in visiting those places...are you a masochist, or do you just take some perverse pleasure in engaging unarmed opponents in wars of wits?

My first engineering boss, in a little office about a mile or so from you as the crow flies, had no patience for demands for "fairness". He'd say things like "what's fair is fair", and "Linearthinker, do you realize that there're about twenty-nine agencies out there who have power of review over my plans, and none of those sons-of-bitches with red pencils have to have an engineering license?" That was about 1963. He was a B-17 pilot flying missions over Europe at age twenty-one.

If people used insurance the way it's supposed to be used, nearly all could afford it. Instead, insurance has become a perceived entitlement, as well as a bargaining chip in union contract negotiations. I saw some data recently that about $1,000 of the purchase price of the average American automobile is consumed paying medical benefits mandated by union contracts. The more services that are covered by free, or low cost insurance, the more people tend to abuse the access. My observation is that the ones who bitch the loudest that they're not being treated "fairly" are the ones who're either too stupid to improve their lot, or too self-indulgent to save, or invest in their own well being, i.e., education, personal savings and investment, and insurance coverage. It's always seems easier to have someone else pay for your stupidity, as long as you can fool yourself into ignoring that what goes around comes around...and ignoring fundamental economics is part of that.

Interestingly, there is a common thread through all of the posts that you mentioned, and, likely, through those unmentioned. Not a single one of them indicated the desire, nor ability, to take responsibility for his/her situation upon themselves. Nor, did any accept personal responsibilty for alleviating their individual situations. Therein lies the foundation of their failures and, not surprisingly, the failure of that entire dogma.

We have at least one clear description of the failure of Communism under optimal conditions. I refer, of course, to the Book of Acts, 4:32 - 5:11, Ananias and Sephira. NewLiving translation.

1. There is no doubt that they are practicing communism:"All the believers were of one heart and mind, and they felt that what they owned was not their own; they shared everything they had...There was no poverty among them, because people who owned land or houses sold them, and brought the money to the apostles to give to others in need." From each according to his means, to each according to his need --- Marx would have been proud to call them brother.

2. They had as close to an incorruptible body of rulers as possible, who were proving their uprightness with miracles every day.

3. And they had pretty close to the ultimate Auditor; when Ananais and Sephira try to cheat the system, Peter knows about it instantly, and the punishment is swift and sure: the cheaters are struck dead on the spot.

And yet there were still cheaters, the apostles couldn't hold it together for very long, and none of the other churches outside Jerusalem seem to have even tried it. If the 12 Apostles backed up by God couldn't make communism work, how in the h*ll would any lesser mortals have a shot?? ;-)

Hey, there! I found this post through a link from Captain's Quarters, and now that I have read it in its entirety, may I just say that you are the Man.

That post was not only well thought out and well argued, it was damn beautifully written, too.

It's rare to find someone who both keenly grasps the truth and is able to explain it clearly (with examples!) to those who don't understand.

And you're doing you're best to spread the Gospel of Milton to the ignorant masses, too! You are a true mensch, sir, and if I weren't already married to a super-cool libertarian blogger that I e-mailed and asked out on a date four years ago, I think I'd be courting you right about now. :)

BTW, said blogger and I were both living in Chicago, thus encouraging me to e-mail him out of the blue (I found him through an Instapundit link and was mightily impressed with his thoughts). And here you are in Rockford, so nearby!

You may have dodged a bullit this day, my friend. ;)

But hey, if I can't ask you out (due to already having achieved martital bliss and all), I can at least add your blog to my favorites list.

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